A Critique of Kirzner's Finders-Keepers Defense of Profit

A Critique of Kirzner's Finders-Keepers Defense of Profit
Burczak, Theodore
2004-10-18 00:00:00
This paper criticizes Kirzner's use of the finders-keepers ethic to justify entrepreneurial profit. It does so by pursuing two lines of argumentation. First, Kirzner's defense of the justice of entrepreneurial profit is based upon treating the wage-for-labor-time exchange as legitimate. There are good reasons for doubting the justice of the wage-labor exchange. The paper argues that the profits earned by a capitalist firm employing wage-labor can not be considered to be just if we accept the juridical principle of imputation. The juridical principle of imputation asserts that people should be held legally responsible for the actions and results of the actions for which they are factually responsible. If we consider hired human beings always to be responsible agents, as is true in David Ellerman's (1992) rendition of the labor theory of property, Kirzner's defense of entrepreneurial profit generated in a capitalist enterprise is weakened. Second, the paper criticizes Kirzner's thesis that in a market economy everyone has, in principle, an equal opportunity to be an entrepreneur directing a productive enterprise or to be an entrepreneur engaging in speculation. Kirzner reaches this conclusion because he believes that credit markets in a free economy do not systematically discriminate amongst types of borrowers. This conclusion has been called into question by credit rationing models demonstrating that asset-poor individuals can be systematically denied access to loans. The credit rationing literature erodes the underpinnings of Kirzner's application of the finders-keepers ethic to the evaluation of entrepreneurial profit earned through speculation or productive creativity because it implies that all individuals do not in principle have an equal opportunity to be an entrepreneur.
http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.pngThe Review of Austrian EconomicsSpringer Journalshttp://www.deepdyve.com/lp/springer-journals/a-critique-of-kirzner-s-finders-keepers-defense-of-profit-VDEDibuzu0

Abstract

This paper criticizes Kirzner's use of the finders-keepers ethic to justify entrepreneurial profit. It does so by pursuing two lines of argumentation. First, Kirzner's defense of the justice of entrepreneurial profit is based upon treating the wage-for-labor-time exchange as legitimate. There are good reasons for doubting the justice of the wage-labor exchange. The paper argues that the profits earned by a capitalist firm employing wage-labor can not be considered to be just if we accept the juridical principle of imputation. The juridical principle of imputation asserts that people should be held legally responsible for the actions and results of the actions for which they are factually responsible. If we consider hired human beings always to be responsible agents, as is true in David Ellerman's (1992) rendition of the labor theory of property, Kirzner's defense of entrepreneurial profit generated in a capitalist enterprise is weakened. Second, the paper criticizes Kirzner's thesis that in a market economy everyone has, in principle, an equal opportunity to be an entrepreneur directing a productive enterprise or to be an entrepreneur engaging in speculation. Kirzner reaches this conclusion because he believes that credit markets in a free economy do not systematically discriminate amongst types of borrowers. This conclusion has been called into question by credit rationing models demonstrating that asset-poor individuals can be systematically denied access to loans. The credit rationing literature erodes the underpinnings of Kirzner's application of the finders-keepers ethic to the evaluation of entrepreneurial profit earned through speculation or productive creativity because it implies that all individuals do not in principle have an equal opportunity to be an entrepreneur.

Journal

The Review of Austrian Economics
– Springer Journals

Published: Oct 18, 2004

Recommended Articles

Loading...

References

Rethinking Ourselves: The Individual, the Community, and the Political Economy of Post Communism

Boettke, P.

Democracy and Capitalism

Bowles, S.; Gintis, H.

Contested Exchange: New Microfoundations for the Political Economy of Capitalism

Bowles, S.; Gintis, H.

Reply to Our Critics

Bowles, S.; Gintis, H.

The Postmodern Moments of F. A. Hayek's Economics

Burczak, T.

Socialism after Hayek

Burczak, T.

Appropriation, Responsibility, and Agreement

Burczak, T.

The Labor Theory of Property and the Injustice of Capitalist Exploitation

Burczak, T.

The Firm, The Market, and the Law

Coase, R.

The Power and Poverty of Libertarian Thought

Cornuelle, R.

Exploitation, Appropriation, and Exclusion

Cullenberg, S.

The Kantian Person/Thing Principle in Political Economy

Ellerman, D.

Property and Contract in Economics

Ellerman, D.

An Estimated Model of Entrepreneurial Choice under Liquidity Constraints